Ryman Healthcare: Compounder At A Low Historical Valuation

Dec. 23, 2020 4:55 PM ETRyman Healthcare Limited (RYHTY), RHCGF22 Comments
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Value Vault


  • Ryman is a great business with low risk of disruption and a growing annuity income stream.
  • We discuss how to think about the real estate capital gains, which we believe is more sustainable than the market thinks, as Ryman uniquely guarantees villagers future health care.
  • The company is trading below its historical valuation and real estate prices are increasing fast. This provides downside protection.

Ryman Healthcare “RYM” is the largest and most reputable provider of retirement villages in New Zealand.

Founded in 1984 by John Ryder and Kevin Hickman, Ryman raised 25M NZD at IPO in 1999 at a 135M NZD valuation and has since paid out 1B NZD in dividends and grown asset value to 7.7B NZD. Mr. Hickman founded Ryman after being shocked by the conditions he found at an old people’s home when he was investigating a fire as a police officer. Mr. Hickman still owns 7% and another 9% is owned by a Canadian investor/professor with long-term board involvement.

“You could say that we have spent the past 18 years since we listed warming up for the main event – and it is about to begin. I would like to explain why. The clear majority of our residents were born in the 1920s and 1930s, in a period when the birth rate was declining post World War I and into the depression. We are entering a period where the birth rate starts to gradually climb before almost tripling at the height of the baby boom. – Simon Challies, ex-CEO

The hockey stick growth is indeed starting:

Figure 1 80+ population prospect: large acceleration yet to come. From Ryman Healthcare’s AR2020.

In the New Zealand retirement village sector, Ryman is the pioneer of total vertical integration. Ryman plans, designs, constructs, and manages villages. And whereas most operators either build care facilities or independent living units and service flats for aged people, Ryman builds and manages both, co-located on each site.

Figure 2 Footprint from AR2020. Current revenue is split 5/6th NZ - 1/6th AUS. Villages under development about 50/50.

The two types of sector fragmentation: real estate development and management on the one hand, and care beds and independent living on the other, has

This article was written by

Value Vault profile picture
Belgian analyst with a long time horizon. Generalist. I prefer fishing in out-of-favor sectors and/or geographies. Not only do those ponds have lower valuations in aggregate, they tend to be less efficient as well. A double advantage for stock pickers.

Disclosure: I am/we are long RYHTY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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